The not so dark side of trust: Does trust increase the size of the shadow economy?

Johanna D'Hernoncourt and Pierre-Guillaume Méon

No 08-030.RS, Working Papers CEB from Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB)

Abstract: This paper studies the relationship between the size of the shadow economy and generalized trust, on a cross-section of countries, both developed and developing, and finds that it is significantly negative. That relationship is robust to controlling for a large set of economic, policy, and institutional variables, to changing the estimate of the shadow economy and the estimation period, and to controlling for endogeneity. It is independent from trust in institutions. We provide evidence that it is mainly present in the sample of developing countries.

Keywords: Shadow economy; informal sector; trust. (search for similar items in EconPapers)
JEL-codes: O11 O17 O57 H26 Z13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-soc
Date: 2008-10
View list of references

Downloads: (external link)
http://www.solvay.edu/EN/Research/Bernheim/documents/wp08030.pdf First version, 2008 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:sol:wpaper:08-030

Access Statistics for this paper

More papers in Working Papers CEB from Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB)
Contact information at EDIRC.
Series data maintained by CEB ().